Kleiner’s Lane Tells Jury Partner Won Promotion After Affair

Karen Gullo and Eric Newcomer

March 2, 2015, 8:38 PM ESTUpdated on March 2, 2015, 10:26 PM EST

Ex-Kleiner Perkins Caufield & Byers partner Ray Lane recounted to jurors how a married junior partner was promoted at the firm after being reprimanded for his sexual relationship with a colleague that he initially lied about.

“Great question,” Lane, Kleiner partner emeritus and former chairman at Hewlett-Packard Co., said Monday in response to a question by Kleiner’s lawyer about why he supported the promotion. Lane was called as a witness at the sex bias trial of Ellen Pao, who accuses the firm of retaliating against her and then firing her for complaining about a co-worker whom she alleged pressured her into having an affair in 2006.

Lane said that while he viewed the relationship with Pao as consensual, it was “inappropriate” for ex-Kleiner partner Ajit Nazre, who was married with two children at the time, to have had a sexual relationship with Pao. He told Nazre in a 2007 e-mail that he made “a serious lapse in judgment” and said Nazre was docked $22,000 from a more than $100,000 bonus as a result of the affair. Lane testified he supported Nazre’s promotion to general partner, even after Nazre initially lied to Lane about the affair, because Nazre quickly admitted the relationship took place.

“He quickly changed his position,” Lane told jurors in state court in San Francisco. “He detected I didn’t believe him.”

In a case that’s focusing new attention on a startup culture and investing environment believed to favor men in the U.S. technology capital, Pao is seeking as much as $16 million in salary and bonuses she says she lost because Kleiner didn’t promote her and paid her less than male co-workers. She also claims she’s entitled to punitive damages because Kleiner’s conduct was malicious.

Later Fired

Nazre was later fired after another female partner at Kleiner, Trae Vassallo, complained that he sexually harassed her, Kleiner’s attorney has said.

Lane said he knew about Nazre’s affair with Pao after it happened because she confided in him. She also discouraged him from punishing Nazre and said they could continue to work together, Lane said.

Lane testified Monday that he made a mistake when he didn’t alert others at the firm when Vassallo told him that Nazre showed up at her hotel room in a bathrobe one night on a 2011 business trip. He said he thought it should be Vassallo’s choice whether to tell others at the firm.

“Then I made a mistake,” Lane said. “I cared more about her feelings than anything else.”

‘Different Direction’

Lane said that when Vassallo told him about the incident, he feared for her safety. “This could have gone a different direction, he could have pushed his way into the room,” Lane said on the stand.

Lane didn’t raise the issue with the partnership immediately. He advised Vassallo to consult with her husband about the incident first. “Talk to your husband, think about it. Come back and talk to me again,” he recalled telling her.

Vassallo submitted a formal complaint to Kleiner about the incident. An investigation followed and Nazre was eventually fired.

Last week, Vassallo testified that Lane had told her that she should be “flattered” about Nazre’s advances.

On the stand Monday, Lane said he made no such comment.

‘Not Me’

“It’s just not me. I wouldn’t say anything in that regard,” Lane said. “First time I heard those words were in the press last week.”

Kleiner contends Pao never formally complained that Nazre harassed her until she hired a lawyer five years after their consensual affair. An investigation determined that Pao’s claims were meritless, Kleiner has said.

The firm denies her treatment was related to her gender. Rather, she lacked leadership skills, didn’t like her job, clashed with co-workers and was advised to leave because she performed poorly, Kleiner executives have said in court.

Pao is now interim chief executive officer of Reddit Inc.

Nazre, who left Kleiner in 2012 and works in India, said before the trial started that Kleiner has denied Pao’s allegations about him and referred questions about the case to the firm. He isn’t a defendant in the case.